Operational Transparency

As children, we have always had to prove to our teachers or our parents that we have been working. The homework book was proof that we have spent our time productively and would often calm down angry parents and teachers. It seems like the same principles also apply in corporate life! Harvard Business Review has come up with the latest article on the benefits of operational transparency. Ever since this article has come out, operational transparency has become the latest buzzword in the corporate world. In this article, we will have a closer look at what operational transparency is. We will try to understand how it can be implemented and what its limitations are.

People Hate To Wait

Harvard Business Review has used complex numbers to prove a phenomenon that many of us know intuitively. For instance, it is a known fact that people hate to wait. This is exactly what is the gist of operational transparency. Operational transparency can be defined as a situation wherein the customer knows exactly what stage of service delivery they are on.

For instance, when we order food in a restaurant, for 10 minutes, we don’t really know what is happening. Sometimes we wonder whether our order is being worked upon at all. Many times we may feel that the order was created in a rush, i.e. due process was not followed, and hence the quality is inferior. To counter this problem, many restaurants have started placing a glass façade in front of their kitchens. This allows the customers to see their order being prepared.

The Harvard study just concluded that if a customer was made to wait the same amount of time in both restaurants, they would be less satisfied when they don’t have the information about their order. On the other hand, when they can see their order being prepared, they are willing to wait longer since they can see that progress is actually being made and work is being done on their order.

People Love To Interact

In the previous century, businesses used to be transparent because of their small scale. However, ever since mass-production has become rampant, there is a huge gap between the producers and the consumers. This has created dehumanization of the entire production experience.

The Harvard study conducted research to find out that both the employee and the consumer were happier when they were interacting face to face. From an employee’s point of view, once they saw a customer in front of them, they were more attentive to their needs because they could better gauge the mood of the customer. On the other hand, from a customer’s point of view, they were willing to wait a little longer since they could see the worker actively engaged in front of their eyes. Operational transparency has a huge impact on the satisfaction levels of the customers as well as employees.

This is the reason why companies like Amazon try to provide transparency to their customers. An order from Amazon does not magically fallout from the sky. Instead, it goes through several stages. Amazon has created a digital map of each of these stages and customers are kept aware of the stage that their order is in. Since the customers know exactly when their order has been picked, packed or shipped, they are not restless or eager to receive their product.

How to Implement Operational Transparency?

The application of operational transparency has to be customized based on the industry. For instance, we just provided examples of the restaurant industry and the e-commerce portals where the concept has been successfully deployed.

The software development industry is another place where this model is being exhaustively used. Under the traditional development model, the customers would give their requirements to the development team and then wouldn’t hear from them until the product was ready for testing. If the development team did face any challenges or delays, it was up to them to fix the problem and deliver on schedule. As far as the customers were concerned, the entire development process was a black box. This is no longer the case. All across the world, software companies are ensuring that their customers remain more involved in the development process. This is because once they are a part of the journey, they are more empathetic towards the challenges which were faced by the development team and therefore reported higher rates of satisfaction.

Limits to Operational Transparency

The theory of operational transparency is fundamentally changing the way many business entities operate. However, there are limits to the application of this theory. For instance, it is a known fact that just like people don’t like to wait, no one likes if someone is watching over their shoulder all the time either! Hence, companies need to make sure that they share information without exerting their employees or making them uncomfortable.

Also, increased operational transparency means that customers also tend to get dissatisfied sooner. Hence, if there is an incompetent employee who is dealing with the customers, they will quickly understand that they are receiving poor service. On the other hand, the service provider may take a long time to find the root cause and fix the problem.

The bottom line is that operational transparency needs to be included in day to day operations. The inclusion of operational transparency does not need an overhaul of the entire business. It can be accomplished quite easily without disturbing the business operations.

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The article is Written By Prachi Juneja and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.

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